Mercantile Law CE-2000

COMPULSORY QUESTION

8. Write only the correct answers in the Answer Book.

Don’t reproduce the questions.

(1) Payment can be made on a Bill of Exchange to:

(b) Only to a person specified therein

(2) How a cheque is treated by a banker among the

following when the balance at credit of drawer is found
insufficient"

(a) Be dishonored.

(3) 'Accommodation Party’ is a person who has signed a

negotiable instrument:

(b) Without receiving the value thereof.

(4) Which of the following is correct:

(a) A Provincial Government can constitute a Corporate

Law Authority.

(5) Which of the following is correct:

(c) None of these.

(6) Good will:

(a) can be sold separately from other property of a firm.

(7.) When undue influence is used in a contract by one
party against the other, the contract becomes:

(b) voidable

(8) Which of the following is correct:

(b) cannot mix

(9) Pledgor or Pawnor are:

(a) same persons

(10) The principal must ratify the contract:

(a) as a whole

(11) A dormant partner is one:

(b) whose name does not appear in any way as partner.

(12) Caveat Emptor means:

(c) The buyer should be aware of the suitability of goods

for his purpose.

(13) If the seller of immovable property has effected a

fire insurance policy in respect of the property, the
purchaser, of the property:

(a) cannot claim any benefit of it.

(14) The delivery of the insurance policy to the assured

is:
(a) essential to make binding contract.

(15) The grace period for every instrument payable at a

specified period after date or after sight is:

(c) 3 days.

(16) Special Resolution is passed at a general meeting of

a Public Company when not less than the following notice
has been given:

(b) 15 days notice

(17) One of the special privileges of a Private Limited

Company is that:

(a) there is restriction on the right of members to

transfer their shares. (By the way this is not a
privilege rather a disadvantage)

(18) A company shall be eligible for registration as a

Modaraba Company if its paid-up capital is not less than:

(c) 2.5 million rupees.

(19) A and B are partners. A buys land with partnership

moneys for his sole benefit. Thereafter, A debits himself
in the firm books and becomes a debtor to the firm for
the amount of the purchase money. The purchased property
is:

(b) not partnership property.

(20) Whether a partner has got power to assign his

partnership interest to any other person so as to make
him a partner in the business?

(b) No
Note: Please suggest ammendments if you find any wrong
answer in this list.

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MCQs Part Solved

COMPETITIVE EXAMINATION 2001.

MERCANTILE LAW

COMPULSORY QUESTION

8. Write only the correct answer in the Answer Book. Do

not reproduce the questions.

(1) A proposes, by a letter sent by post, to sell his

house to B. The acceptance of the proposal is complete:
(b) the moment the letter is received by B.

(2) In order to convert a proposal into a promise, the

acceptance must be:
(b) Unconditional

(3) A voidable contract may be turned by the option of

the party at a loss into:
(b) A valid contract

(4) The maximum number of members in a private company

is:
(b) 50

(5) The maximum number of partners in a firm is:

(c) None of these

(6) The Companies Ordinance, 1984:

(c) None of these

(7) A Company is subsidiary of another Company:

(a) If the other company holds more than 50% of its
voting shares

(8) P appoints A as his agent. A is not a person of full

age:
(b) The appointment of A is valid

(9) Statutory meeting of a Company is held:

(a) Once in a life time of the Company
(10) Publication of Prospectus is compulsory by:
(a) A Private Company

(11) Award is a decision given by:

(b) An arbitrator

(12) A lends some ornaments to B to be used in a

marriage. The transaction is:
(a) A bailment

(13) A partner may be expelled from a partnership by:

(a) A majority of partners

(14) Third Party Insurance is an Insurance Relating to:

(c) None of these

(15) A Bill of Exchange has:

(b) Three parties

(16) A minor:
(a) Can make, draw, accept, or indorse a negotiable
instrument

(17) A void as well as an illegal contract is:

(b) Not familiar in effect

(18) In the Companies Ordinance, 1984, there are:

(a) Kinds of shares

(19) Like a cheque, a bill of exchange may be:

(b) Cannot be crossed
("Like" should not be used rather "unlike")
(20) An executor consideration takes the form of:
(a) A promise to be performed in future

Note: Rectification will be appreciated.

Regards

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(14) Third Party Insurance is an Insurance Relating to:

(c) None of these (Not sure, option (a) may also qualify
for the answer i.e Motor Vehicles Accidents)

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MCQs Part Solved

CE-2002

MERCANTILE LAW

COMPULSORY QUESTION

8. Write only the correct answer in the Answer Book. Do

not reproduce the questions.
(1) Portage Ltd wishes to alter its memorandum to state
that all of the company’s shareholders must hold a
minimum of 200 shares. Can Brian, who currently owns 100
shares, be bound by this alteration?
(a) Yes, if the alteration is done by special resolution

(2) Gama offers to sell his care to Maja for Rs.

550,000/-, Maja accepts the offer but states that he
would buy it for Rs. 500,000/-. The statement of Maja is:
(b) A counter offer

(3) Kala Khan agreed to supply onion to Sodagar Khan six

months after the date of contract and Kala Khan agreed to
pay for such supply. Two months after the conclusion of
the contract Kala Khan refused to supply. In such case
which of the following facts is correct?
(c) Sodagar Khan can validly sue Kala Khan any time after
he refused to supply onions.

(4) Sharafat Hussain offererd to sell his tonga to

Sadaqat Hussain for Rs. 35,000/- but Sadaqat Hussain did
not answer and nearby standing Kiramat Hussain accepted
the offer. Kiramat Hussain’s answer to the offer is:
(d) None of these

(5) The appointment of a person of the minor age as an

agent is:
(b) Valid

(6) Third party insurance is an insurance for:

(a) Motor vehicles’ accidents (Doubt)

(7) A bill of exchange involves

(b) Three parties

(8) A bearer instrument may be negotiated by:

(a) Mere delivery

(9) An order instrument may be negotiated by:

(b) Endorsement and delivery

(10) A partnership business is unlawful if the number of

partners in it is:
(c) More than twenty

(11) The relation between the partners of a firm is of:

(c) Principal and Agent

(12) An unregistered contract of partnership is:

(a) Valid (Doubt, Registration of partnership is not
compulsory but unregistered partnership suffers from some
legal disabilities)
(d) None of these (May be the 2nd choice)

(13) A decision made by arbitrators is called

(b) Award

(14) An empire in an arbitration reference is appointed

when the number of arbitrators is:
(b) Even

(15) The minimum number of members in a Private Limited

Company is:
(b) Two

(16) A Public Limited Company must have:

(b) Seven directors

(17) Which of the following rights a company cannot have:

(b) Right to vote in the general elections of the state.

(18) The maximum age for a person who concludes a

contract of sale of goods is:
(d) None of these
(19) It is essential for the validity of a contract of
sale of goods that the price must be paid.
(c) None of these

(20) If the delivery of goods under a contract of sale of

goods is late.
(a) The buyer is not bound to accept the delivery.

Note: Rectifications will be appreciated.

Regards

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CE-2003
MERCANTILE LAW
COMPULSORY QUESTION

8. In each of the following clauses of this question only

one statement is correct. Write down in your answer book
only the correct statement of the following clauses. Do
not write the whole clause.

(1) To what extent is a member of a company which is

limited by guarantee personally liable for the company’s
debts?
(c) His personally liability is limited to the amount set
out in the memorandum on a winding up.

(2) Jamshed, a house painter, misreads his work under

order and paints Salman’s house by accident while Salman
sits inside watching. Which of the following is correct?
(d) a quasi-contract has been formed

(3) On 30-11-2003 A offered to buy one of the 10 tables

of the same specification present in B’s shop for 500
rupees. B accepted the offer. It was agreed that the
table would be delivered on 1-12-2003 while the price
would be paid on 8-12-2003. It was not clear which of
those tables was attributed to the contract. Which of the
following is correct?
(c) The table will become the property of A on 8-12-2003
when he will pay the price.
(4) Akram sent a proposal to Banaras by post for the sale
of his stall in the Sunday Market. Banaras accepted the
offer by post. Banaras may revoke his acceptance at any
time before:
(a) Akram receives the letter of acceptance

(5) A appoints B as his agent for buying him a house. B

appoints C as his agent to arrange a house to be bought.
C is liable to:
(a) B only

(6) Delivery of an insurance policy to the insured is:

(b) Essential to form a binding contract between the
prties

(7) A partner may be expelled from a firm

(a) By the majority of the partners

(8) An order instrument may be negotiated by:

(b) Endorsement and delivery

(9) A cheque is always payable.

(b) On demand

(10) A sold some food stuff to B, a minor, on credit. If

B refuses to pay:
(a) A can be paid out of the property of B

(11) If a contract has been fully performed by both

parties, that contract would be described as:
(a) Executed contract

(12) An unregistered contract of sale of a computer is:

(c) Unenforceable
(13) A decision made by an arbitrator is:
(b) Appealable

(14) Each party to an arbitration agreement can appoint:

(a) Only one arbitrators

(15) Shahid and Hamid wished to form a company. On 1

December 2002 they filed all the required documents with
the Register. On 10 February 2003 they received the
Certificate of Incorporation dated 1 February 2003. The
company was incorporated on:
(b) 1 February 2003

(16) A public limited company must have:

(b) Seven directors

(17) A listed public limited company must have:

(b) Seven directors

(18) A, aged 18 for whom a court has appointed a

guardian, wants to make a contract. He can make a
contract.
(b) After attaining the age of Twenty-one years

(19) A agrees to pay B 10,000 rupees if his (B’s) horse

wins the race. The horse died one day before the race.
The contract is:
(b) Void

(20) Abid’s son has forged Majid’s name to a pronote.

Majid under threat of prosecuting Abid’s son demanded
that he should sell him his bungalow that is worth one
billion rupees for one million only. Abid had no way
except to agree with the proposal. The contract is:
(c) Voidable
Regards

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  #6  
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Thank U Raz Sahib!!!

Thank u brother for responding promptly at my request.... but still 5 papers to go so i again
request u to kindly attempt the rest of the papers....

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CE-2004

MERCANTILE LAW

COMPULSORY QUESTION

8. Write only the correct answer in the Answer Book. Do not

reproduce the questions.

(1) A person on attaining age of majority.

(a) Can ratify an agreement made by him during his minority.

(2) A person who has attained the age of 18 while under guardian:
(b) Is not competent to contract

(3) A person who is usually of unsound mind:

(a) Can make a contract during the interval when he is of sound
mind.

(4) When a contract is substituted with a new contract.

(b) The original contract need not be performed.

(5) For a breach of contract:

(b) The plaintiff can recover compensation if the subject matter
of the contract was not easily available in the market.

(6) The supplier of necessaries:

(b) Can recover the price from the property of the minor.

(7) A contract of which one party promises to save the other from
loss caused to him by the conduct of the promise himself or by
the conduct of any other person.
(b) IS called a contract of indemnity

(8) Surety is a person:

(a) Who promises to perform or discharge the liability of a third
person in case of his default.

(9) If the bailee’s lawful charges are not paid, he may retain
the goods:
(c) None of these

(10) A person who works under the control of another:

(a) Is known as an agent

(11) A promises to pay Rs. 1000 to B and takes a promissory note

from him for that amount but pays only Rs. 500 on it.
(c) None of these

(12) A bill of exchange is addressed to B. It is accepted by (i)

B as a partner of a firm in the firm’s name, (ii) it is accepted
by B and C.
(c) None of these

(13) A buys nylon pant from a store and starts wearing it. A
contracts skin disease:
(c) None of these

(14) A, B & C are partners in a business. An order for certain

goods is placed with D. Before the goods are delivered, C dies. D
had no notice of the death of C:
(b) A & B are jointly as well as severally liable

(15) When a firm is put to an end as between all the parties:

(b) It is dissolution

(16) A partner may be expelled from a firm if there is agreement

to that effect:
(a) By majority of the partners

(17) Differences between the arbitrators are:

(b) Decided by an Umpire

(18) A authorizes B to buy 50 sheep for him. B buys the whole lot
of 44 sheep and 15 lambs for one sum of Rs. 30000:
(a) A can repudiate the whole transaction

(19) A public limited company must have:

(c) None of these

(20) An agreement based on bilateral mistake:

(a) Is void

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CE-2005

MERCANTILE LAW
COMPULSORY QUESTION

8. Write the correct answer in the Answer Book. Do not reproduce the question.

(1) Talal is forming a business which he wants to control completely. He knows

nobody else with whom he wishes to work, he values his privacy, and he dislikes
formality, paper work, state filing requirements, and lawyers. What type of business
organization should he prefer?
(b) Sole Proprietorship

(2) The Articles of Association of a company contain:

(c) Information about the corporation, including its organization and functions.

(3) A partnership involves three essential elements. Which of the following is not one
of those elements?
(b) Limited liability for the liabilities of the firm

(4) Rashid, Shahid and Talal agree to form a computer business. Rashid agrees to
manage the business and to assume full persona; liability. Shahid and Talal agree to
invest in the firm but to be liable only to that extent. These three have formed :
(b) a limited liability partnership

(5) The members of a limited partnership include:

(a) general and limited partners

(6) A bearer cheque may be negotiated by:

(a) Mere delivery
(7) The responsibility for overall management of a company belongs to:
(c)the board of directors

(8) The best definition of a quorum is which of the following?

(b) It is the number of members of a company that must be present before
business may be transacted.

(9) When a partnership is found liable for a debt, which assets are first used to pay the
debt?
(c)Partnership assets

(10)The board of directors does not have responsibility over which of the following
areas?
(d) None of these

(11)A found a wallet full of money on a roadside and upon finding the address of the
owner in the wallet he returned it to its owner. When he came back he read the
announcement of a reward for the return of such wallet in the newspaper:
(b) The owner is not liable to pay him the reward

(12) Muhsin is considering forms of business organization for his law firm. One
advantage of the limited liability partnership form is that it allows the limited partners
to avoid personal liability for:
(c) the obligations of the firm within the limit their contributions to the capital

(13) A’s son has forged B’s name to a pronote. B under threat of prosecuting A’s son
demanded that A should sell him his house that is worth Rs. 1000,000/- for 300,000/-.
A agrees with the proposal; The contract is:
(b) Voidable
(14) The best, simple definition of a contract is:
(b) a legally enforceable agreement

(15) Salman signs a written contract with Khalid giving him the right to cast his votes
in the election for the directors of Hashiya Limited, whose shares Salman holds. This
agreement between Salman and Khalid is known as:
(b) a proxy

(16) A sent a proposal to B by post for the sale of his house. B accepted the offer by
post. A may revoke his proposal at any time before :
(b) B posts the letter of acceptance

(17) Danish offers to sell to Sadiq a mobile phone for Rs. 550. Sadiq tells Danish that
he will take the phone for Rs. 450. Nothing further is said and the next day, Danish
demands Rs. 450 from Sadiq in exchange for the phone. Choose the correct statement:
(c) Sadiq is not bound to pay as there is no contract

(18) If you want to start a partnership what formal requirements do you have to meet?
(b) You do not need to satisfy any formal requirements

(19) The relation between the partners of a firm is of:

(c) Principal and Agent

(20) A bearer of instrument may be negotiated by:

(a) Mere delivery

Regards
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  #9  
Friday, September 04, 2009
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Bravo Raz Sahib

3 papers are left brother... anxiously waiting for them....

thanks for ur prompt response...

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Please Verify the Answers!!!

Every One is invited to please verify the answers of these MCQs. Since there there were no
solved MCQs of Mercantile Law therefore i am trying to facilitate the members of the forum
with the team efforts....
but please on cocksure answers or faults must be pointed out with corrections.

@ Raz Sahib
Janab kindly counter verify these MCQs n also write the answers of the missing one

@ Tahir Rauf (red Hawk)

Thank u brother for ur personal efforts.

FEDERAL PUBLIC SERVICE COMMISSION

COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS
IN B.P.S. -17, UNDER THE FEDERAL GOVERNMENT, 2005
MERCANTILE LAW
(Compulsory Question)

8. Write the correct answer in the Answer Book. Do not reproduce the question.
(1) Talal is forming a business which he wants to control completely. He knows nobody else
with whom he wishes to work, he values his privacy, and he dislikes formality, paper work, state
filing requirements, and lawyers. What type of business organization should he prefer?
(a) general partnership (b) Sole Proprietorship
(c) Single Member Company (d) None of these
(2) The Articles of Association of a company contain:
(a) a set of governing rules adopting by the company
(b) resolutions of the board of directors
(c) information about the corporation, including its organization and functions.
(d) None of these
(3) A partnership involves three essential elements. Which of the following is not one of those
elements?
(a) An equal right in the management of the business
(b) Limited liability for the liabilities of the firm
(c) A joint ownership of the business
(d) None of these
(4) Rashid, Shahid and Talal agree to form a computer business. Rashid agrees to manage the
business and to assume full personal liability. Shahid and Talal agree to invest in the firm but to
be liable only to that extent. These three have formed
(a) a limited liability company (b) a limited liability partnership
(c) an unlimited partnership (d) None of these
(5) The members of a limited partnership include:
(a) general and limited partners (b) general partners only
(c) creditors (d) None of these
(6) A bearer cheque may be negotiated by:
(a) Mere delivery (b) Endorsement and delivery
(c) Delivery with a separate written contract
(d) None of these
(7) The responsibility of overall management of a company belongs to:
(a) the chief financial officer (b) the employees
(c) the board of directors (d) None of these
(8) The best definition of a quorum is which of the following?
(a) It is 51% of all shareholders
(b) It is the number of members of a company that must be present before business may be
transacted.
(c) It is the number of voters who must agree to alter the company’s articles.
(d) None of these
(9) When a partnership is found liable for a debt, which assets are first used to pay the debt?
(a) Individual assets of the partners
(b) Personal property of the limited partners
(c) Partnership assets (d) None of these
(10) The board of directors does not have responsibility over which of the following areas?
(a) The appointment, supervision, and removal of corporate officers
(b) The appointment, supervision, and removal of employees generally
(c) The declaration and payment of corporate dividends
(d) None of these
(11) A found a wallet full of money on a roadside and upon finding the address of the owner in
the wallet he returned it to its owner. When he came back he read the announcement of a reward
for the return of such wallet in the newspaper:
(a) The owner is liable to pay him the reward
(b) The owner is not liable to pay him the reward
(c) The owner is liable to pay him half of the reward
(d) None of these
(12) Muhsin in considering forms of business organisation for his law firm. One advantage of the
limited liability partnership form is that it allow the limited partners to avoid personal liability
for:
(a) the malpractice of other limited partners regarding the conduct of the firm’s business
(b) the obligation of the firm beyond their contributions to the capital
(c) the obligations of the firm within the limit their contributions to be capital
(d) None of these
(13) A’s son has forged B’s name to a pronote. B under threat of prosecuting A’s son demanded
that A should sell him his house that is worth Rs. 1000,000/- for Rs. 300,000/- A agrees with the
proposal. The contract is
(a) Valid (b) Voidable
(c) Void (d) None of these
(14) The best, simple definition of a contract is:
(a) an objective “meeting of the minds”
(b) a legally enforceable agreement
(c) a document reflecting a “meeting of the mind” between two or more competent parties
(d) None of these
(15) Salman signs a written contract with Khalid giving him the right to cast his votes in the
election for the directors of Hashiya Limited, whose
shares Salman holds. This agreement between Slaman and Khalid is known as:
(a) a derivative (b) a proxy
(c) a Memorandum of Understanding
(d) None of these
(16) A sent a proposal to B by post for the sale of his house. B accepted the offer by post. A may
revoke his proposal at any time before
(a) B receives the letter of proposal
(b) B posts the letter of acceptance
(c) A receives the letter of acceptance
(d) None of these
(17) Danish offers to sell to Sadiq a mobile phone for Rs. 550. Sadiq tells Danish that he will
take the phone for Rs. 540. Nothing further is said and the next day, Danish demands Rs. 450
from Sadiq in exchange for the phone. Choose the correct statement
(a) Sadiq is bound to pay as his offer has been accepted by Danish;
(b) Although there is no contract Sadiq;
(c) Sadiq is not bound to pay as there is no contract;
(d) None of these
(18) If you want to start a partnership what formal requirements do you have to meet?
(a) You must register the firm with the Registrar of Firms;
(b) You do not need to satisfy any formal requirements;
(c) Your firm cannot operate until you draft and get registered the Article of Partnership;
(d) None of these
(19) The relation between the partners of a firm is of:
(a) Employer and Employee (b) Trustee and Beneficiary
(c) Principal and Agent (d) None of these
(20) A bearer instrument may be negotiated by:
(a) Mere delivery
(b) Endorsement and delivery
(c) Delivery with a separate written contract
(d) None of these

FEDERAL PUBLIC SERVICE COMMISSION

COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS
IN B.P.S. -17, UNDER THE FEDERAL GOVERNMENT, 2006
MERCANTILE LAW
(Compulsory Question)
8. In each of the following clauses of this question only one statement is correct. Write down in
your answer book only the correct statement of the following clauses. DO NOT WRITE THE
WHOLE CLAUSE:
(1) When an offer can only be accepted by the performance of the person to whom the offer is
made, is characteristic of:
(a) bilateral contracts; (b) unilateral contracts;
(c) implied contracts; (d) None of these
(2) A tells B, “If you stood first in the class, I’ll pay you Rs.5000.00. B stood first in class and A
paid him Rs.5000.00. Which of the following is correct?
(a) A and B had a unilateral contract;
(b) A and B had an executory contract;
(c) A and B had an executed contract;
(d) None of these
(3) A offers to sell B his motorcycle at some time in the future. B accepts. Is there a valid
contract?
(a) Probably not, the terms are not definite;
(b) Probably yes;
(c) Definitely not because A failed to communicate the offer;
(d) None of these
(4) Which of the following is not an effective way to terminatean offer?
(a) By rejection; (b) By acceptance;
(c) By counter offer; (d) None of these
(5) A offers to sell B his collection of rare books for Rs.5000.00. Before B even has a chance to
accept, A says, “Sorry, I changed my mind, no deal.” This is an example of:
(a) Revocation; (b) Rejection;
(c) Counter Offer; (d) None of these
(6) A and B enter into a contract in which A agrees to deliver milk to a restaurant. They forget to
include a price in the agreement. A court will:
(a) refuse to enforce the agreement;
(b) select the lowest quoted price for milk and insert it into the contract;
(c) determine a reasonable price and insert it into the contract;
(d) None of these.
(7) A agreed to supply food for Walima to B at 1: 00 pm. However, he could hardly supply the
food at 5: 00 pm.
(a) B can reject the delivery;
(b) He can not reject the delivery;
(c) B must accept the delivery;
(d) None of these
(8) Which of the following actions an unpaid seller can not take against a buyer:
(a) Lien; (b) Stoppage in transit;
(c) Sale; (d) None of these
(9) When a partnership is found liable for a debt, which assets are first used to pay the debt?
(a) Individual assets of the partners;
(b) Personal property of the limited partners;
(c) Partnership assets. (d) None of these
(10) A partnership involves three essential elements. Which of the following is not one of those
elements?
(a) An equal right in the management of the business;
(b) Limited liability for breach of contract;
(c) A joint ownership of the business
(d) None of these
(11) Which of the following actions requires the unanimous consent of all partners before it may
be undertaken?
(a) Hiring a new employee
(b) Purchasing new office equipment;
(c) Admitting new partners;
(d) None of these
(12) An Order Instrument is the one which is payable to:
(a) A named person; (b) To a bearer;
(c) To both (d) None of these
(13) A bearer Instrument is the one which is payable to:
(a) A named person; (b) To a bearer;
(c) To both; (d) None of these
(14) A holder in due course is the one:
(a) Who finds an instrument;
(b) Who steals an instrument;
(c) Who gets an instrument as a gift;
(d) None of these
(15) For the incorporation of a limited liability company filing of Memorandum of Association is
essential:
(a) for a public limited company only;
(b) for a private limited company, a public limited company and an unlimited company;
(c) for a Public Limited company only;
(d) None of these
(16) A subsidiary company is the one:
(a) which holds the majority shares of another company;
(b) which deals in the trading of shares of other companies;
(c) in which the majority shares are held by another company;
(d) None of these
(17) A is considering different forms of business organization for his business. For the purposes
of owning property and being a party to litigation, forms which are legal entities separate from
their owners include:
(a) Limited Partnership only;
(b) Private Limited Companies only;
(c) Both Private and Public Limited Companies
(d) None of these
(18) A decision made by arbitrators is called:
(a) Sentence; (b) Award;
(c) Judgment (d) None of these
(19) An empire in an arbitration reference is appointed when the number of arbitrators is:
(a) Odd; (b) Even;
(c) More than 10. (d) None of these
(20) The appointment of a person of the minor age as an agent is:
(a) Void; (b) Valid;
(c) Voidable (d) None of these

FEDERAL PUBLIC SERVICE COMMISSION

COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS
IN BPS - 17, UNDER THE FEDERAL GOVERNMENT, 2007
MERCANTILE LAW
(Compulsory Question)

Q.8. Write only the correct answer in the Answer Book. Do not reproduce the question.
(1) Which of the following is a bilateral contract?
(a) A tells B that he will pay him Rs. 200 if B will wash his car which B does.
(b) A writes B a letter in which he promises that if B will wash his car, he will pay him Rs. 200
which B does.
(c) A and B both sign a piece of paper which says, “A agrees to pay B Rs. 200 if B agrees to
wash A’s car in exchange for Rs. 200.”
(d) None of these
(2) A called his friend B and offered to give him two tickets of a cricket match taking place next
month. B said “okay! I love to watch cricket matches.” A few days later A called B and told him
that he couldn’t give B the tickets. Assuming B sued A:
(a) He would probably win as a contract was formed.
(b) He would probably lose because the contract was not in writing.
(c) He would probably lose as the court would hold no contract was formed.
(d) None of these
(3) Under the doctrine of quasi contract, a plaintiff may recover in “quantum merit”, a Latin
phrase that means:
(a) “as much as he deserves” (b) “treble damages”
(c) “only a token sum” (d) None of these
(4) Which of the following writings are negotiable instrument?
(a) A promise to pay Rs. 2000 for the services rendered if the services are renders as soon as
possible.
(b) An unconditional promise to pay a reasonable sum for the services rendered.
(c) An unconditional promise to pay Rs. 3000 some time next month.
(d) None of these
(5) A has a bill of exchange that does not indicate when it is to be paid as the language of the bill
only says “Pay”. When is it payable to A?
(a) In 30 days.
(b) Never as the instrument is void if it does not have a payment date.
(c) In a reasonable time.
(d) None of these
(6) A writes a cheque on his Habib Bank account to pay for groceries at Utility Stores. Who is
the drawee?
(a) Utility Stores
(b) Both Habib Bank and Utility Stores
(c) Habib Bank
(d) None of these
(7) Which of the following may count as the signature of a drawer?
(a) An “X” made by the drawer
(b) The signature of the drawer’s agent
(c) Both of the above
(d) None of these
(8) Which of the following language on an order will create a bill of exchange?
(a) “Pay X if you can” (b) “I wish you pay X”
(c) “Please pay X” (d) None of these
(9) Which of the following is payable at a definite time?
(a) “Payable when “Z” wins the presidential election.”
(b) “Payable on or before May 30.”
(c) Both (a) and (b)
(d) None of these
(10) Which of the following phrases makes an order bill of exchange?
(a) “Pay to the order of A.”
(b) “Pay to the order of my brother.”
(c) Both (a) and (b)
(d) None of these
(11) A writes a postdated cheque. Is it negotiable?
(a) Yes
(b) No, because it does not specify a definite date of payment
(c) No, because postdated cheques are void
(d) None of these
(12) You write a cheque to pay for your haircut. In this transaction, who is the drawee?
(a) You because you drew up the cheque
(b) Your bank because it must pay the cheque
(c) The person who cuts your hair because the cheque is payable to him
(d) None of these
(13) The best, simple definition of a contract is:
(a) An objective “meeting of minds.”
(b) A negotiated two-party agreement upon which each party will act or refrain from acting.
(c) A document reflecting a “meeting of the minds” between two or more competent parties.
(d) None of these
(14) If A is hit by a car, and B, a doctor, sees the incident and performs emergency first aid upon
A which results in A recovery:
(a) A unilateral contract is created whereby A is obligated to pay Dr. B for services rendered.
(b) A bilateral contract is created and both parties must perform their duties.
(c) A quasi contract is created between the parties.
(d) None of these
(15) A offers to sell to B a mobile phone for Rs. 5500. B tells A that he will take the phone for
Rs. 4500. Nothing further is said and the next day, A demands Rs. 4500 from B in exchange for
the phone. Choose the true statement:
(a) B is not obligated to pay Rs. 4500 to A
(b) B is obligated to pay Rs. 4500 to A
(c) B is obligated to pay Rs. 5500 to A
(d) None of these
(16) The most common form of agency is:
(a) Implied (b) Express
(c) Injunctive (d) None of these
(17) Assume that a new partner enters an ongoing partnership. The new partner’s liability to
preexisting creditors is best described by which of the following?
(a) The new partner is not liable to preexisting creditors of the firm.
(b) The new partner must negotiate his or her liability with the preexisting creditors.
(c) The new partner is only liable to the preexisting creditors to the extent of his capital
contribution.
(d) None of these
(18) What is not a correct statement concerning promoters?
(a) They are agents of the company
(b) They generally are active before the company is formed
(c) They owe fiduciary duties to the company
(d) None of these
(19) The phrase “piercing the corporate veil” refers to:
(a) Inspecting the books of the company
(b) The ignoring by courts of the corporate entity in order to do justice
(c) Learning the identity of the shareholders of the company
(d) None of these
(20) When someone gives to another person a power of attorney, this means that:
(a) Such person is an undisclosed principal
(b) Such person is a disclosed principal
(c) Such person given the power has authority to act as an agent
(d) None of these

FEDERAL PUBLIC SERVICE COMMISSION

COMPETITIVE EXAMINATION FOR
RECRUITMENT TO POSTS IN BPS-17 UNDER
THE FEDERAL GOVERNMENT, 2008

MERCANTILE LAW
(Compulsory Question)

Q. 1 Select the best option/answer and fill in the appropriate box on the Answer Sheet.
(i) If the consideration for an agreement is inadequate, the agreement is:
(a) Valid (b) Void
(c) Voidable (d) None of these
(ii) On a contract by an Agent on behalf of an undisclosed Principal, the Principal:
(a) May sue on contract (b) Cannot sue
(c) Is hit by privity of contract (d) None of these
(iii) Carlill v Carbolic Smoke Ball Co. Ltd. deals with:
(a) Counter proposal (b) Implied acceptance
(c) Implied revocation (d) None of these
(iv) What is the amount of care a bailee is required to take in respect of goods bailed to him:
(a) Extraordinary (b) Ordinary
(c) Reasonable (d) None of these
(v) A Void Contract is:
(a) An illegal agreement
(b) Parlty valid agreement
(c) Ceased to be a valid agreement
(d) None of these
(vi) X agrees not to carry on a similar business with Y for two years in consideration of Rs.
50,000/- as goodwill. The agreement is:
(a) Void due to restraint of trade (b) Valid
(c) Against X’s fundamental rights (d) None of these
(vii) Which one of the following cannot be called an Act of God:
(a) An unprecedented rainfall (b) An earthquake
(c) Fire not caused by lightening (d) None of these
(viii) An obligation arises from:
(a) A contract (b) From a wrongful act
(c) Both (a) & (b) (d) None of these
(ix) The rule nemo dat quod non habet means:
(a) No-one should interfere in another’s business

(b) No-one should be retained in a partnership against his will

(c) No-one can give what he has not got
(d) None of these
(x) In a public company the shares are subscribed by:
(a) Government (b) Management
(c) Creditors (d) None of these
(xi) Can a minor be:
(a) Admitted as partner in a firm
(b) Admitted to the benefits of partnerships
(c) Admitted as a sleeping partner
(d) None of these
(xii) Transfer of property means:
(a) Delivery of goods (b) Transfer of possession
(c) Transfer of ownership (d) None of these
(xiii) Caveat Emptor rule means:
(a) Employer beware (b) Seller beware
(c) Creditor beware (d) None of these
(xiv) A liquidator is a person:
(a) Who is chairman of Board of Directors
(b) Promoter of a company
(c) Who winds-up a company
(d) None of these
(xv) Which one of the following clauses is considered vital in a memorandum of association of a
public company:
(a) Name clause (b) Object clause
(c) Capital clause (d) None of these
(xvi) A subsidiary company means
(a) A supporting company (b) A non-entity
(c) An unregistered company (d) None of these
(xvii) Which of the following actions an unpaid seller cannot take against a buyer:
(a) Exercise the right of lien
(b) Stoppage of goods in transit
(c) Sale
(d) None of these
(xviii)X draws a gun and asks Y to sign an agreement. This is:
(a) Persuasion (b) Coercion
(c) Undue influence (d) None of these
(xix) X is involved in some business; he transfers his share without the consent of all its
members. He is working in:
(a) A company
(b) A firm